1. What Is The Startup Equity Dilution Calculator?

The Startup Equity Dilution Calculator computes the new ownership percentage after a funding round using the formula ND = OS / (OS + NS), where OS represents original shares and NS represents new shares issued.

2. How Does The Calculator Work?

The calculator uses the dilution formula:

Where:

• \( OS \) — Original shares (pre-funding)
• \( NS \) — New shares issued in funding round
• \( ND \) — New dilution (ownership percentage)

Explanation: The formula calculates the percentage of ownership that remains after new shares are issued in a funding round.

3. Importance Of Equity Dilution Calculation

Details: Understanding equity dilution is crucial for startup founders and investors to assess how funding rounds affect ownership percentages and control of the company.

4. Using The Calculator

Tips: Enter the original number of shares and the number of new shares to be issued. Both values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What is equity dilution?
A: Equity dilution occurs when a company issues new shares, reducing the ownership percentage of existing shareholders.

Q2: How does dilution affect founders?
A: Founders' ownership percentage decreases with each funding round, though the value of their shares may increase if the company valuation grows.

Q3: Can dilution be avoided?
A: Some dilution is inevitable when raising capital, but founders can negotiate terms to minimize excessive dilution.

Q4: What is anti-dilution protection?
A: Provisions that protect investors from dilution in subsequent funding rounds at lower valuations.

Q5: How often should dilution calculations be done?
A: Before and after each funding round to understand the impact on ownership structure.